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QuinStreet, Inc. (NASDAQ:QNST) shareholders will have a reason to smile today, with the covering analyst making substantial upgrades to next year's forecasts. The analyst greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. The market seems to be pricing in some improvement in the business too, with the stock up 9.6% over the past week, closing at US$11.34. It will be interesting to see if this latest upgrade is enough to kickstart further buying interest in the stock.
After this upgrade, QuinStreet's sole analyst is now forecasting revenues of US$538m in 2021. This would be a decent 8.6% improvement in sales compared to the last 12 months. Statutory earnings per share are anticipated to plunge 29% to US$0.28 in the same period. Before this latest update, the analyst had been forecasting revenues of US$470m and earnings per share (EPS) of US$0.18 in 2021. There has definitely been an improvement in perception recently, with the analyst substantially increasing both their earnings and revenue estimates.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that QuinStreet's revenue growth will slow down substantially, with revenues next year expected to grow 8.6%, compared to a historical growth rate of 13% over the past five years. Compare this against other companies (with analyst forecasts) in the industry, which are in aggregate expected to see revenue growth of 16% next year. So it's pretty clear that, while revenue growth is expected to slow down, the wider industry is also expected to grow faster than QuinStreet.
The Bottom Line
The biggest takeaway for us from these new estimates is that the analyst upgraded their earnings per share estimates, with improved earnings power expected for next year. Pleasantly, the analyst also upgraded their revenue estimates, and their forecasts suggest the business is expected to grow slower than the wider market. With a serious upgrade to expectations, it might be time to take another look at QuinStreet.
The covering analyst is clearly in love with QuinStreet at the moment, but before diving in - you should be aware that we've identified some warning flags with the business, such as its declining profit margins. For more information, you can click through to our platform to learn more about this and the 5 other concerns we've identified .
Another way to search for interesting companies that could be reaching an inflection point is to track whether management are buying or selling, with our free list of growing companies that insiders are buying.
This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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